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Life Insurance Policies 29
Variable Life & Variable Universal Life

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MR. WATSON: Two guarantees with the variable life policy:

MR. WATSON: Premiums never change, and the death benefit cannot drop below what you initially purchased. You can absolutely shoot for the moon, miss it, and you still live up there among the stars. Y'all understand?

MR. WATSON: If I invest in a mutual fund, am I usually taxed on it?

ALL: Yes.

MAN: Not in this situation.

MR. WATSON: You are not taxed on these, because the money is inside a life insurance policy. Do y'all understand?

ALL: Yes.

MR. WATSON: It's a beautiful thing. You need two licenses to sell this. You need the state's license and a securities license, federal license (FINRA). Does that make sense?

ALL: Yes.

WOMAN: Who chooses the investments?

MR. WATSON: The client. So remember, during the sales interview you must give the client a prospectus.

MR. WATSON: So what we have talked about is

Variable universal life

MR. WATSON: Same as a universal life, flexible premiums & an adjustable death benefit, but the policyowner chooses the investments. Let me ask you a question, winding this thing up.

MR. WATSON: Which would you rather have, a flexible or fixed premium? Which do you want?

ALL: Fixed.

MR. WATSON: No, you don't. You want flexible, because you could make a flexible premium fixed. But you can't make a fixed premium flexible. You understand?

ALL: Yes.

MR. WATSON: That one I can answer for you. Out of all these policies we talked about, which one gives you the ability to have a flexible premium?

ALL: Universal life.

MR. WATSON: Universal life. Now, out of all these, which one gives you the choice of investments? Variable. Which one would you rather have? Would you rather the company make the investments at 4 to 5 percent, or do you want to chance it at making a better return than that? Which one gives you that choice?

ALL: Variable.

MR. WATSON: Variable universal life. You combine the universal life, the flexibility of the premium payments, with the choice of choosing investments, and you have what I call "the beast"- variable universal life policy. Remember, it has the word "universal" in it, so, the premiums are flexible. It also has the word "variable", so, the policy owner chooses the investments. You have stock-market returns tax-free.

MR. WATSON: I didn't say "tax deferred." How do you get that money tax-free?

MAN: Die.

WOMAN: Or borrow.

MR. WATSON: Die or borrow. Do you have to pay it back while you are living?

MAN: No.

Permanent Policies a Little Run Down
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